AMZN long setup and detailed explanation - 1:3 Risk-Reward
Updated
Amazon daily chart shows higher lows and higher highs. I have decided to go long with a proper risk management. I'm going to risk ~2% of my account here.
AMZN LONG TRADE SETUP:
Entry: 1739.43 (or at the opening of 18th Nov)
SL: 1681.62 ($57.81 from entry)
1. TP: 1811.69 ($72.26 from entry - 1:1.25R)
2. TP: 1933.25 ($193.82 from entry - 1:3.35R)
Risk: ~2%
WARNING: Winning probability is lower than 45% (by the day of execution)
DESCRIPTION:
Say you have $10,000.00 in your account. How much would you risk per trade? My maximum risk appetite is 2%. In this case, I'm planning to risk $200.00. Let's calculate our position size:
IMPORTANT: If you are new to trading, you want to risk lower. Preferably lower than 1%.
Stop loss value = Entry - SL = 1739.43 - 1681.62 = 57.81
For short setups, you need to use absolute value. That's why we are getting absolute value of stop loss value. In this case, we will not need to use ABS, but let's make a habit of doing it.
Stop loss value = ABS(Stop loss value)
Position size = Risked amount / Stop loss value
Position size = 200 / 57.81 = 3.46
We can not buy 3.46 lots (3 or 4). If I buy 4 lots, my risk is going to be $231 (2.31%) and if I buy 3 lots my risk is $173.46 (1.73%). I'm okay with 2.31% as it's lower than 3%.
Note that as your account balance grows (or if you have a higher account balance), you want to risk lower to be consistently profitable. Losing $200 may not hurt you but if you have $100,000.00 you don't want to risk $2,000.00 per trade. Sooner or later, you are going to have consecutive losses.
Margin = Lot x Entry price = 4 x $1739.43 = $6957.72
After entering this trade, i will still have $3042.28 in my account balance. I have used only 70% of my account balance for this trade.
SUMMARIZE:
Risk = $231 = 2.31% of entire balance
Margin = $6957.72 = 69.57% of entire balance
Available balance = $3042.28
1. Target profit = $289.04
1. Target probability is lower than 45% (by the day of execution)
2. Target profit = $775.28
2. Target probability is lower than 40% (by the day of execution)
DISCLAIMER: I'm not a financial advisor. This article is shared for educational purposes only and should not considered financial or investment advice. Please do not follow my trades.
Please remember to follow me on TradingView
Trade safe,
Atilla Yurtseven
AMZN LONG TRADE SETUP:
Entry: 1739.43 (or at the opening of 18th Nov)
SL: 1681.62 ($57.81 from entry)
1. TP: 1811.69 ($72.26 from entry - 1:1.25R)
2. TP: 1933.25 ($193.82 from entry - 1:3.35R)
Risk: ~2%
WARNING: Winning probability is lower than 45% (by the day of execution)
DESCRIPTION:
Say you have $10,000.00 in your account. How much would you risk per trade? My maximum risk appetite is 2%. In this case, I'm planning to risk $200.00. Let's calculate our position size:
IMPORTANT: If you are new to trading, you want to risk lower. Preferably lower than 1%.
Stop loss value = Entry - SL = 1739.43 - 1681.62 = 57.81
For short setups, you need to use absolute value. That's why we are getting absolute value of stop loss value. In this case, we will not need to use ABS, but let's make a habit of doing it.
Stop loss value = ABS(Stop loss value)
Position size = Risked amount / Stop loss value
Position size = 200 / 57.81 = 3.46
We can not buy 3.46 lots (3 or 4). If I buy 4 lots, my risk is going to be $231 (2.31%) and if I buy 3 lots my risk is $173.46 (1.73%). I'm okay with 2.31% as it's lower than 3%.
Note that as your account balance grows (or if you have a higher account balance), you want to risk lower to be consistently profitable. Losing $200 may not hurt you but if you have $100,000.00 you don't want to risk $2,000.00 per trade. Sooner or later, you are going to have consecutive losses.
Margin = Lot x Entry price = 4 x $1739.43 = $6957.72
After entering this trade, i will still have $3042.28 in my account balance. I have used only 70% of my account balance for this trade.
SUMMARIZE:
Risk = $231 = 2.31% of entire balance
Margin = $6957.72 = 69.57% of entire balance
Available balance = $3042.28
1. Target profit = $289.04
1. Target probability is lower than 45% (by the day of execution)
2. Target profit = $775.28
2. Target probability is lower than 40% (by the day of execution)
DISCLAIMER: I'm not a financial advisor. This article is shared for educational purposes only and should not considered financial or investment advice. Please do not follow my trades.
Please remember to follow me on TradingView
Trade safe,
Atilla Yurtseven
Trade active
Trade executedTrade active
Closed half. In a free trade now. Did not move my stop.Note
Sold another half. Moved my stop to BE and holding the restTrade active
Still in a trade and holding small amount.Trade closed: target reached
Closed at 2051.47
I know Kung-Fu!
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